Cynamen Advisors on Transformational Shifts in Retail

Posted by SkillSetz Team on May 4, 2021 8:00:00 AM

Jennifer Cyra and Kurt Hardy are experienced transformation consultants with proven records for driving growth and profitability.  As former Fortune 500 senior executives, both Jennifer and Kurt have been at the heart of transformation for their entire careers, and deep understanding of consumers and demand creation is part of their DNA. Cynamen Advisors designs turnaround and growth initiatives for companies ranging from start-ups to the Fortune 500.

Spring is in the air, and the change in season brings some good news for retailers, it seems. We have been reading a lot about optimism for the anticipated strong rebound in consumer spending for 2021, in part because the National Retail Federation  “anticipates that retail sales will grow between 6.5%-8.2% as more individuals are vaccinated, and the economy reopens”.  Given that “retail is the nation’s largest private sector employer supporting one in four US jobs” (NRF), this good news is long overdue.And yet, we feel that any retailer who thinks that they are due for a return to “business as usual” will be sorely disappointed.  The world is vastly different in 2021 than it was a year ago, and consumers have adapted to a new normal.  Here’s our take on what transformational shifts will be needed for retailers to win with consumers.

1)    Leading with Digital

eCommerce adoption is growing leaps and bounds and consumer behaviors have forever changed changed. According to NRF, “online sales are expected to grow between 18-23%” in 2021, or more than triple the total growth rate. The customer journey mainly begins with search, plain and simple, and often ends with a few more taps to add to cart and checkout. Put this together with our belief that store closures must accelerate as a response to cost pressures of operating a physical footprint amidst the pressure of declining demand and it's clear that the digitally enabled commerce is where companies will win. One thing is certain, the pandemic brought out adaptability and resourcefulness in consumers. While the inspiration to try online ordering or to test "Buy Online, PickUp In Store" fulfillment for the first time may have stemmed from a desire to find a safe way to shop, we anticipate that after a year of changed behavior, many customers will continue to embrace these conveniences for the time savings and efficiency they deliver. With all of these factors in play, we wonder why it is that we see so few retailers truly flipping the paradigm to reinvent their assortment and marketing processes to focus on what’s right for the online channel rather than what makes a pretty planogram for the stores or a nice layout for a print ad?  Why is it that while we’ve seen some pretty slick apps that deliver seamless, interconnected channel experiences, we still find so many that deliver a clunky, fragmented and outdated path to purchase?  We say that it’s time for all retailers to think “digital first”, and, we might argue, a mindset that is long overdue in coming.

2)    Scrapping the Timelines

Having grown up in the retail industry as both buyers and sellers, we know firsthand that retailers are notorious for having exceptionally long lead times for their purchasing and seasonal marketing processes.  External vendor management and many strategic decisions tends to be governed by the constraints of the longest lead time rather than by an overarching priority of maintaining ultimate flexibility.  We argue that there is no need to “lock and load” if you don’t have to, especially if you’ve adopted a digital-first mentality. We also know this is easier said than done, given the complexity and interdependencies woven into most retailers' processes. Scrapping these obtuse timelines altogether and designing innovative new process calendars that maintain utmost flexibility would be a competitive threat, yet this will be a huge transformational shift for many retailers.

3)    Tuning Up Communication 

At the risk of being redundant, we feel it bears repeating that the world is emerging from the global pandemic in a different place than we were just one year ago.  For starters, retailers must acknowledge that the economic impact of high unemployment means there is a widening gap in purchasing power across consumer segments.  Recognizing this and demonstrating empathy really matters.  Digging deeper, a retailer’s commitment to equity and equality matters.  Whether or not products are sourced using sustainable practices matters.  Demonstrating a concern for the environment matters.   Giving back matters.  What it means?  The formulaic “product-price” approach retailers typically use as a default isn’t going to cut it any longer.  Across all consumer touch-points, communication messaging demands consistency and the tone, authenticity and “why we should trust” in the message is more important than ever to consumers.   

4)    Understanding Change Never Ends

We get it.  2020 threw all of us a huge, collective curve ball.  Some retailers were more prepared than others.  As disruptive as 2020 was, it was also a huge wakeup call that the pace of change is happening exponentially faster than ever before, and strategies are often not keeping pace.  Simply keeping up means you’re really falling behind because the need for change never ends.  We know change is hard, but innovation = survival when failure can often mean extinction these days.

Is any of this transformation easy?  

Well, the short answer is if it were easy, everyone would have done it by now.  It’s hard.  Really hard.  But it can be fun too! Now is the time to act.  The upside in growth potential certainly makes it worth the effort, but when we consider one in four jobs depend on retailers finding a path forward, failure is not an option.  Inspired by the same optimism we feel about the anticipated growth of commerce this year, we believe the time for radical transformation is now.